In re Erie Trust Co.
Pennsylvania Supreme Court
191 A. 613 (1937)
Erie Trust Co. (the Company) (defendant), trustee of the Estate of W.W. Gingrich (the Estate) (plaintiff), improperly withdrew $25,819.80 in commissions from the Estate and deposited the funds into its own general cash resources, which included a general bank account (with a lowest balance during the relevant period of $2,865.40), other cash items ($1,937.63), and deposits at other banks (lowest balance $6,373.23); the Company also used some of these commingled funds to purchase bonds and a mortgage. After the Company became insolvent and entered receivership, the Estate sought priority over other creditors for these funds; the trial court denied the request, and the Estate appealed.
Whether a constructive trust may be imposed on a trustee's various commingled cash accounts and the securities purchased with those funds, when the fraudulently obtained cash was not traced into any single specific bank account but was spread across the trustee's combined cash resources.